Estate Agents responsibility to vet buyers

pippinontheroof

Hi,

We have just found out that the people buying our house have had to pull out because the people buying their house changed their minds. I understand that this can happen to anyone but my issue is with my estate agent. When the potential buyers came to view our house with our estate agent, we were told quite clearly that they had already sold their house and that they had to be out within 3 weeks. It was our estate agent that told us this, repeatedly. We went on to make an offer on a house based on the fact that we were chain free, and got a good price because of it. Obviously we were shocked when we learnt that the house had not been sold at all, that the date for them to be out was simply a verbal agreement and nothing had been signed. This clearly has affected our agreement with the person we are buying from (it's fallen through after we've paid out hundreds in search and survey fees and, incidentally, the person selling to us has paid for a solicitor to write up a contract for us to sign).

Now, my question is, should our estate agent have requested some form of evidence from the buyer that they had a signed contract (as a completion date would suggest) or is it left purely to us to try to verify whether a buyer is telling the truth? We assumed that when your estate agent tells you the buyers have to be out of their property by a certain date (and therefore you need to be out by that date too) then they have gone on more than the buyer's verbal promise. Any views?

Many thanks in advance.

Yorkie1

Sorry to hear your news but ...

1. You are assuming that the EA properly understood what your buyer told them.

2. You are assuming that the EA asked the right questions to elicit the information you wanted from the buyers.

You can stipulate to the EA whatever vetting you want from someone before you will consider any offer from them.

However, you should bear in mind that practically every potential buyer will either be a first time buyer, or have sold their house subject to contract -i.e. not yet exchanged. If you start stipulating that you won't entertain an offer unless the potential buyer has already exchanged and can provide proof of a completion date, you're cutting out about 90%+ I'd guess of your market and have unrealistic expectations of how the process goes.

Unfortunately people on both sides of the equation pull out for all sorts of reasons and that is the system in England / Wales.

DVardysShadow

Yorkie1 wrote: »

However, you should bear in mind that practically every potential buyer will either be a first time buyer, or have sold their house subject to contract -i.e. not yet exchanged. If you start stipulating that you won't entertain an offer unless the potential buyer has already exchanged and can provide proof of a completion date, you're cutting out about 90%+ I'd guess of your market and have unrealistic expectations of how the process goes

Agree 100%.If you are going to stipulate that your buyer must have exchanged, your market is reduced to FTB's, renters and people who have sold and are sofa surfing with relatives and friends. The expectation is totally unrealistic and a substantial obstacle to ever selling.

You are always vulnerable to people above and below not exchanging contracts and you must factor that into your plans.

InMyDreams

pippinontheroof wrote: »

We went on to make an offer on a house based on the fact that we were chain free, and got a good price because of it.

I think your vendors have as much (if not more) reason to be upset with you as you are with your buyers. You were never 'chain-free' as not only your purchase clearly relied on you selling your house, but you hadn't even exchanged contracts yet.

Luckily for you, they can no more claim anything from you as you can from the people who wanted your house.

Lavendyr

Annoyingly, EAs do not always tell the truth. In fact, quite often they will say anything - whether they know the answer or not. Unfortunately my experience is that I would not trust anything an EA says until backed up by solid evidence.

Case in point - we recently completed on a house. When offering, we asked EAs what their plans were. Answer: "Oh, they're going into rented." The truth was that they were looking to buy and had not yet found a house at that stage.

Later on, and sellers have found a house, call the EA again to ask whether we were in a chain & the extent of it. Answer: "Your sellers are buying a new build so there is no chain." In fact, they were not buying a new build at all but were buying from another party who in turn had a related purchase. Gah!

On your further question - the EA is acting for you as your agent. You can make whatever stipulations you like. But as others have said, if you require proof that your buyer is either FTB or SSTC on their house (or in fact exchanged) - you will restrict your market significantly. Whether or not you can afford to do this depends on the house you are selling. If it will appeal to FTBs it would probably have a lower impact than if it is a larger/family house where those buying are more likely to be 'on the ladder' already.

pippinontheroof

InMyDreams wrote: »

I think your vendors have as much (if not more) reason to be upset with you as you are with your buyers. You were never 'chain-free' as not only your purchase clearly relied on you selling your house, but you hadn't even exchanged contracts yet.

Luckily for you, they can no more claim anything from you as you can from the people who wanted your house.

Why "more"? We explained to the vendor exactly what we had been told, i.e. that we believed that our buyers had already had a legal sale. That's what I meant by chain free, as oppose to suggesting we were cash buyers. I fail to see where this makes us "more" guilty of false information than the party that offered on our house?

DVardysShadow

pippinontheroof wrote: »

Why "more"? We explained to the vendor exactly what we had been told, i.e. that we believed that our buyers had already had a legal sale. That's what I meant by chain free, as oppose to suggesting we were cash buyers. I fail to see where this makes us "more" guilty of false information than the party that offered on our house?

By saying you were chain free you were saying that your purchase was not contingent on the sale of your own property. Quite plainly you were not chain free - in fact you were totally dependent upon the chain. Doubtless you did not intend to mislead, but by describing yourselves as chain free you very much did mislead.

Now, perhaps if you accept that you made a mistake, you might find you need to be a little more tolerant of errors in what others say - at least to the point that you take it with a pinch of salt.

Annisele

pippinontheroof wrote: »

Why "more"? We explained to the vendor exactly what we had been told, i.e. that we believed that our buyers had already had a legal sale. That's what I meant by chain free, as oppose to suggesting we were cash buyers. I fail to see where this makes us "more" guilty of false information than the party that offered on our house?

Sorry, I'm afraid I'm entirely with DVS on this one.

You might have meant that your buyers already had a sale - but that isn't what "chain free" means. Chain free means there's no chain at all, and you're free to buy another house no matter what happens to yours.

I know plenty of people get confused with the terminology. A friend of mine seriously annoyed his vendors by telling them he was a "cash buyer", but what he actually meant was that he was a first time buyer and therefore wouldn't be selling another property. In other words, he was chain free - but he thought the correct term for that was "cash buyer". He later had issues with his mortgage...

So, your potential buyers (or their agent) told you that they'd sold their house, which wasn't true. You told your potential vendors that you were chain free, which means that you don't need to sell your house to buy theirs - which also wasn't true.

However, since you also told your vendors that you believed your buyers already had a sale, that should perhaps have tipped them off that you weren't sure on the terminology! They might have thought you meant that you could afford to buy this new house without selling your old one, and that you'd be prepared to own two houses for a while.

Unfortunately the house buying system in England and Wales makes both parties responsible for all their own costs, and leaves both parties entirely free to pull out up until exchange. In this case that's possibly lucky for you - as I think you'd have been just as liable for misinformation as your buyers - but in future it's something you should bear in mind before paying out for anything.

ash28

Lavendyr wrote: »

Annoyingly, EAs do not always tell the truth. In fact, quite often they will say anything - whether they know the answer or not. Unfortunately my experience is that I would not trust anything an EA says until backed up by solid evidence.

Case in point - we recently completed on a house. When offering, we asked EAs what their plans were. Answer: "Oh, they're going into rented." The truth was that they were looking to buy and had not yet found a house at that stage.

Later on, and sellers have found a house, call the EA again to ask whether we were in a chain & the extent of it. Answer: "Your sellers are buying a new build so there is no chain." In fact, they were not buying a new build at all but were buying from another party who in turn had a related purchase. Gah!

On your further question - the EA is acting for you as your agent. You can make whatever stipulations you like. But as others have said, if you require proof that your buyer is either FTB or SSTC on their house (or in fact exchanged) - you will restrict your market significantly. Whether or not you can afford to do this depends on the house you are selling. If it will appeal to FTBs it would probably have a lower impact than if it is a larger/family house where those buying are more likely to be 'on the ladder' already.

We were in the opposite position to you - we sold our house and intended to go into rented for 6 months - we were moving to a new area and decided that renting was the best option - just in case.

When we advertised our house it was advertised with "no upward chain". And it sold quickly - decent house - good area - good schools.

However a house came up for sale in the new area which ticked every box and had a gold star against the price, so we offered on it.

Our buyers, understandably were jumping up and down - as were their buyers. We were prepared to go into holiday accommodation for 2 or 3 weeks if necessary - but only if absolutely necessary.

As it happened there was no delay to the chain below us because of us, but our buyers hadn't been entirely truthful with their lender and things were delayed in the end for 2 weeks while things were in the hands of their mortgage underwriters. It was quite ironic really.

flora48

I have come across different interpretations of cash buyer. I had an offer from a so called cash buyer who then lost his buyer. The EA explained that he was a cash buyer as he did not need a mortgage. Cash buyer to me is having money in the bank available in order to buy.

ReadingTim

Sadly you will also come across buyers who regard it as an absolute outrage that EAs (or even vendors) ask for evidence of their ability to proceed. "My word is my bond" they claim, as they merrily point out to others that a verbal agreement isn't worth the paper it's written on...